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(1) A securities firm may consider the impact of the situations listed in (a) to (c) on its capital levels when assessing its exposure to concentration risk:(a) the potential loss that could arise from large exposures to a single counterparty;(b) the potential loss that could arise from exposures to large transactions or to a product type; and(c) the potential loss resulting from a combination of events such as a sudden increase in volatility leaving a hitherto fully-margined

(1) A securities firm should also consider the impact of external factors on the levels of capital it needs to hold. Scenarios covering such external factors should relate to its strategy and business plan. A securities firm might wish to consider the questions in (2) to (7).(2) Whether it plans to participate in a one-off transaction that might strain temporarily or permanently its capital.(3) Whether the unevenness of its revenue suggests that it should hold a capital buffer.

A securities firm may also want to assess the impact of its internal credit limits on its levels of capital. For instance, a firm whose internal procedures authorise dealing without cash in the account or without pre-set dealing limits might consider more capital is required than if it operated stricter internal credit limits.

(1) A securities firm may consider the impact of the following situations on its capital levels when assessing its exposure to concentration risk: (a) the potential loss that could arise from large exposures to a single counterparty; (b) the potential loss that could arise from exposures to large transactions or to a product type; and(c) the potential loss resulting from a combination of events such as a sudden increase in volatility leaving a hitherto fully-margined client unable

A securities firm should also consider the impact of external factors on the levels of capital it needs to hold. Scenarios covering such external factors should relate to its strategy and business plan. A securities firm might wish to consider the following factors:(1) whether it plans to participate in a one-off transaction that might strain temporarily or permanently its capital;(2) whether the unevenness of its revenue suggests that it should hold a capital buffer. Such an